Deutsche Bank-Fed Watcher December doubts-118797991

2025 20:13:23 GMT2025 20:13:23 GMTDeutsche Bank. ResearchDeutsche BankResearchFed WatcherAmy Yang | Matthew Luzzetti | Brett Ryan | Justin Weidner | Avik ChattopadhyayDecember doubtsNovember 10, 2025IMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. UNTIL 19th MARCH 2021 INCOMPLETE DISCLOSURE INFORMATION MAY HAVE BEEN DISPLAYED, PLEASE SEE APPENDIX 1 FOR FURTHER DETAILS.Deutsche Bank. ResearchDB Fed Watcher: December doubts2Fedspeak Who**TakeawaysBias*Waller [2] (10/31)▪ Labor market has been weak▪ PCE ex-tariff about 2.5%▪ All data argued for Dec. cutMiran [1](11/01,03,07)▪ ADP print a welcome surprise. Policy too restrictive, too far above neutral. 50bps Dec. cut▪ Data since Sept. supports more dovish stanceJefferson [3] (11/07)▪ Policy somewhat restrictive. Proceed slowly with rates closer to neutral. Prudent approach▪ Economy little changed in the past few months. Labor market gradually cooling ▪ Tariff stalled headline inflation, underlying inflation towards 2%Williams [2] (11/06)▪ Model-based r* est.~1%. Lower r* era still with usBarr [2] (11/06)▪ Made progress on inflation, still work to do. Need to ensure labor market is solidDaly [3] (11/03, 11/10)▪ Open minded for Dec. meeting ▪ Tariff effects largely confined to goods. Rising productivity, GDP▪ Slowing wage growth pointed to weakening labor demandCook [2] (11/03)▪ Policy modestly restrictive. Every meeting live, balanced approach▪ Tariff pass-through not yet done. Act forcefully if it persisted▪ Labor market solid, softening but only modestlyFedspeak, continued Who**TakeawaysBias*Schmid [5] (10/31)▪ Inflation remains too high, labor market largely in balance, economy showing continued momentum▪ Policy only modestly restrictive▪ Viewed currently stable inflation expectation as a policy outcome▪ Lean against demand growth▪ A 25bps rate cut can have long-lasting effects on inflation, but might not do much to labor marketHammack [5] (10/31)▪ Would have preferred no cuts in Oct. Policy barely restrictive, not obvious it needs to ease more▪ Rising r*. Several model est. ~1.5%▪ Inflation ~3% in ’25 and much of ’26, reach 2% next 2-3 yrs. UR a few tenths about NAIRU in early ’26▪ Inflation broader than tariffs, strong core services, can’t look through▪ Missing more on inflation mandate than jobGoolsbee [4] (11/03)▪ View not much changed since Sept. meeting. Thresholds for cutting in Dec. higher than Oct. ▪ A little more worried about inflation than stabilizing job market▪ See terminal rate a fair bit below current levels. Uneasy to frontload cuts without inflation dataMusalem [4] (11/06, 11/10)▪ Near full employment, and lean against inflation. Move cautiously▪ Limited easing space▪ 30-80k breakeven payroll* Bias of speech / research for monetary policy: Dovish Neutral Hawkish Summary: Officials’ views remained highly split with a majority favoring cautious approach. Meaningfully higher bar for further rate c